BlackBerry to cut 40% of global workforce, expects $950 mn net loss

A week prior to the announcement of its second quarter results, Blackberry said it expected to incur huge losses due to writedowns and other factors, to the tune of $950-$995 million in operating costs.

In its preliminary announcement, the company said that it also plans to cut 4,500 jobs as part of its restructuring plans - approximately40% of the Company’s global workforce resulting in a total workforce of approximately 7,000 full-time global employees.

“The Company also announced that it is targeting an approximate 50% reduction in operating expenditures by the end of the first quarter of Fiscal 2015. As part of this, BlackBerry will implement a workforce reduction of approximately 4,500 positions,” the company said in a press release.

Facing intense competition and seeing its market share eaten up by others like Apple Inc’s iPhone and Samsung Electronics, the company is also assessing its strategy and trying to claw back into competition by refocussing on its enterprise and prosumer market. The company also announced that its future smartphone portfolio will shrink from six devices to four and increase the access of its smartphones to a larger audience by introducing phones also for the entry level audience.

“The portfolio will focus on enterprise and prosumer-centric targeted devices, including 2 high-end devices and 2 entry-level devices in all-touch and QWERTY models. With the launch of the BlackBerry Z30 - the next generation high-tier smartphone built on the BlackBerry 10 platform - this week, the Company will re-tier the BlackBerry Z10 smartphone to make it available to a broader, entry-level audience,” the release said.

Blackberry said it was making the difficult but necessary changes in an effort to regain its position in the highly competitve smartphone market.

Thorsten Heins, President and Chief Executive Officer of BlackBerry said, “We are implementing the difficult, but necessary operational changes announced today to address our position in a maturing and more competitive industry, and to drive the company toward profitability.”

The silver lining though is the company’s enterprise service, the BES 10, which saw an increase in penetration, with more than 25,000 commercial and test servers installed till September 20, compared to 19,000 in July 2013.

“Our enterprise business continues to reflect the trust that governments and businesses have placed in the BlackBerry platform,” added Heins. “Security matters and enterprises know the gold standard in enterprise mobility is BlackBerry.”